Market Research certainly has its place in the innovation process. When I think about New Product Development or the innovation funnel we discuss in class, I see market research used in different stages:

Generating ideas

Testing and optimizing concepts

Building the business case

Gathering post-launch feedback

And throughout this process of innovation, market research can come in many forms - from more traditional market research surveys which seek to assess the market potential of an idea to more innovative idea crowdsourcing models and collective prediction methodologies.

But is all this market research really driving innovation? We’ve heard a range of opinions on the issue this semester and I wanted to take this time to further explore the idea that some aspects of market research might be misleading and may in fact hinder innovation.

Market research can be misleading

Market research can often be biased, either due to the set of consumers surveyed or to the manner in which questions are posed. Market research on a large scale can be very expensive. As such, companies are inclined to try to reduce costs in the early stages of new product development by surveying their own, easier-to-reach core customers. The problem with this approach is that core customers tend to be loyal and predisposed to liking the company’s products. Thus, testing new concepts with this consumer set may only give the company a sense of how much its own customers are likely to demand this new product relative to the company’s existing products. This form of market research is less useful in telling the company whether it is likely to attract new customers with this product. Furthermore, market research surveys are not easy to design: it is difficult to write questions in a way that does not “lead” the respondent to the desired answers.

Market research (and I use the term loosely) is not just about testing ideas…it can also be used to generate ideas. Take the example of MyStarbucksIdea: this forum encourages Starbucks customers to submit ideas and vote on innovations they would like to see implemented. Are these crowdsourced ideas a great way to supplement the internal innovation pipeline? Sure. Are they representative of what may do well on the market? Not always. The risk with this type of forum is that the input may be representative of the vocal minority rather than of the majority of customer preferences.

Market research may hinder innovation

My real concern is around the risk of market research actually preventing innovation from happening. What happens when a company believes too deeply in market research? How much are go/no-go decisions based on this research? I worry about managers deciding not to invest in potentially disruptive innovations because market research does not predict high demand. In the case of really disruptive innovations, markets and consumers may not yet exist and market research may therefore be incapable of predicting real demand. BrainJuicer is an innovative market research company which uses collective prediction methodologies (the wisdom of the crowds) to test its clients’ new product concepts: It asks respondents whether they would sell or buy shares of a given concept. My question is: how much are the respondents’ bets informed by their knowledge of currently marketed, analogous products? If respondents are presented with a concept that is too innovative and has no existing analogous product on the market, does the predictive capability break down?

This semester, we discussed companies (e.g. Apple and Bang & Olufsen) that shy away from market research, believing that customers may not know what they want. Steve Jobs even once claimed that Apple does no market research because customers cannot be expected to know what the “next big thing” is. So where does that leave us?

Is there still hope for market research?

Of course there is. When done right, market research can be very powerful. We all remember the example of how a consumer insights study led to the Swiffer innovation. Here, consumer insights were used to frame a problem and really redefine the “job” of mops. Market research is also very valuable in the process of iterating on an innovation (pre or post-launch) according to customer feedback on features.

So the question I would pose to all of you is the following: how will you use market research and how much will it inform your innovation decisions?

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